Hydrofracking Offers Short-Term Boom, Long-Term Bust

In February, Buffalo became the second city in the nation to ban hydrofracking, as a response to concerns over possible negative impacts of the technique used for extracting natural gas. In November, the New York state Assembly passed a temporary moratorium on hydrofracking to allow for studies to be conducted. With the moratorium ending May 15, some communities are considering if they should follow Buffalo’s lead.

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Vast portions of western and central New York sit atop the Marcellus Shale formation, which contains large reserves of natural gas. The oil and gas industry claims that hydrofracking will be a panacea to the economic woes of the region and that thousands of jobs will be created. These projections are based on studies funded by the natural gas industry, which has enormous stakes in hydrofracking. Studies not funded by the gas industry reach different conclusions, namely that while the practice may bring a short-term boom, it would be followed by a long-term bust. In the long run, if hydrofracking comes to upstate New York, the region may end up worse off economically than it is now.

Hydrofracking involves first drilling down, then horizontally, within a shale formation. Water, sand and chemicals, many of which are toxic, are then injected at high pressure to fracture the shale and release the gas.

BARTH

While supporters of the technique claim otherwise, evidence shows that hydrofracking may contaminate our water and drilling for shale gas is unlikely to bring long-term economic prosperity to upstate New York.

Many scientists raise concerns about serious health impacts and water contamination from the chemicals used in the process. A Riverkeeper report cites more than 100 cases across the U.S. where federal and state regulators identified gas-drilling operations as the known or suspected cause of groundwater, drinking water and surface water contamination.

A recent EPA technical support document states that production and delivery of natural gas emits more greenhouse gases than production and delivery of oil.

Regarding the promise of economic prosperity, studies funded by the gas industry are flawed. They ignore the fact that 70% of gas rig jobs in Pennsylvania are going to people from out of state, according to Laura Fisher, senior vice president of the Allegheny Conference on Community Development. Drilling operations typically involve numerous transient workers, who send earnings to their families in their home states.

Also ignored is increased spending by communities on emergency medical care, first responders and law enforcement. Local hospitals and fire departments may be ill-equipped to handle industrial accidents.

Demands on public transportation budgets are ignored. Fewer new roads and bridges can be built if budgets have to be spent on increased maintenance of roads damaged by increased heavy truck traffic.

The studies ignore high costs associated with potentially severe health impacts such as cancer, brain damage, respiratory disease and endocrine disruption that have been connected to chemicals used in fracking.

Also not reflected are potential declines in other industries. The negative effect on natural beauty and the environment would hurt the tourism industry.

Supporters assume that property values will increase. In fact, they may decrease. Last fall, the Denton Record Chronicle reported that in Wise County, Texas, real estate appraisers have discounted valuations by as much as 75% when a gas well sits on the land.

Although communities could see a short economic boom, independent and academic studies conclude that regions that have encouraged extractive industries experience relatively high poverty and unemployment rates in the long term. Other independent studies show limited multiplier impacts on local economies and any positive impacts are likely to be short-lived.

In the long run, gas companies and a few lucky landowners may be the only ones that benefit from gas drilling in the Marcellus Shale. Are they worth the risks of potentially severe and, in some cases, irreversible consequences in the form of health, environmental, infrastructure and long-term economic degradation? New York state should consider following Buffalo’s lead.

In the end, if hydrofracking comes to upstate New York, the region may end up worse off economically.

Jannette M. Barth, PhD, president of J.M. Barth & Associates Inc. and founder of Pepacton Institute LLC, has 35 years of experience in economic modeling and forecasting.

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